Banking and mining shares rally

BANKING AND mining stocks led a low-volume rally on European stock markets yesterday, as hopes of central bank action to shore up the euro zone economy remained in place despite the European Central Bank resisting pressure to intervene in the short term.

Markets were briefly pared back as the ECB put the onus firmly on euro zone governments to solve their debt crises, dashing expectations that it would take action ahead of the Greek elections. But the major European stock markets finished up between 2 and 2.4 per cent.

“There’s a general feeling that the world isn’t going to end just yet, and we’ll get a few more weeks out of it,” said one Dublin-based equities dealer.

DUBLIN

THE ISEQ index climbed 2.5 per cent, as most of the major stocks made gains. Bank of Ireland rose 8 per cent to 10 cent as financial stocks across Europe took part in a technical rally.

Titanium miner Kenmare also had a good day, advancing 7.8 per cent to 58 cent, while exploration group Dragon Oil launched a $200 million share buyback programme, which pushed it up 8 per cent to €6.48.

Grafton, owner of the DIY chain Atlantic Homecare, which was placed into examinership yesterday, closed flat at €2.75.

There were a few buyers circling the Iseq’s biggest stock, CRH, lifting the cement-maker up 7.2 per cent to €13.93, a rise of 94 cent. There was a certain amount of catch-up trading in the market as London re-opened after its extra jubilee bank holiday on Tuesday, but volumes were better rather than being great.

However, sentiment had improved, one dealer noted: “After a torrid May, there’s a few people putting their hand in their pocket in June.”

LONDON

THE FTSE 100 blue chip index rose 2.4 per cent as UK stocks posted their biggest advance in six months.

A gauge of British banks rallied, as Barclays climbed 8.2 per cent to 187.80 pence and Lloyds Banking Group rose 5.2 per cent to 27.05 pence. The lender agreed to sell 809 million pounds ($1.25 billion) of Australian corporate real-estate loans to a Morgan Stanley and Blackstone Group LP joint venture for about £388 million in cash.

Man Group, the world’s biggest publicly traded hedge fund manager, advanced 7.1 per cent to 80.9 pence, as Citigroup raised its recommendation on the stock to buy from neutral.

BG Group gained 3.4 per cent to 1,241 pence after Goldman Sachs named it as a top pick among integrated oil companies.

Mining shares rallied as metal prices including copper, lead and nickel rose in London. Vedanta Resources, an aluminium and copper producer in India, added 9.1 per cent to 963.5 pence. Fresnillo, the world’s largest primary silver producer, increased 7.4 per cent to 1,472 pence.

Kazakhmys, Kazakhstan’s largest copper producer, gained 7.4 per cent to 714.5 pence. Petropavlovsk Plc, which operates gold mines in Russia, rallied 9.7 per cent to 425.6 pence. The stock was raised to buy from neutral at UBS AG.

Ormonde Mining, which also has a listing in Dublin, set out a production timescale for its tungsten mine in Spain, which pushed it up 8 per cent in London trading.

Yell Group, the publisher of UK yellow pages directories, jumped 5.7 per cent to 1.67 pence after Citigroup raised the stock to neutral from sell.

EUROPE

NATIONAL BENCHMARK indexes climbed in all 17 western European markets that were open. Germany’s DAX rose 2.1 per cent, while France’s CAC 40 also rallied 2.4 per cent.

The Stoxx Europe 600 Index added 2.3 per cent to 239.95 at the close of trade, the biggest gain since November 30th.

In Frankfurt, Rheinmetall surged 6.8 per cent after Berenberg Bank upgraded the stock to “buy” from “hold” on expectations the German industrial group will win some significant defence orders in 2012 and on valuation.

UBS and Credit Suisse Group AG, Switzerland’s largest lenders, also advanced. Dutch supermarket Ahold, meanwhile, shed 4.2 per cent after reporting weaker-than-expected earnings in the first quarter.

US

STOCKS ROSE in early trading in New York, sending the Dow Jones Industrial Average toward its biggest gain in 2012, on bets global policy makers will act to stimulate the economy.

Bank of America surged 6.4 per cent to pace gains in financial shares. Caterpillar and Hewlett-Packard advanced at least 2.5 per cent. Home Depot, the largest US home-improvement retailer, climbed 3.1 per cent after raising its stock repurchase plan by $500 million for fiscal 2012.

Chesapeake Energy rallied 5.7 per cent as the company was said to be in advanced talks to sell pipelines to Global Infrastructure Partners for more than $4 billion.

(Additional reporting:Bloomberg/Reuters)